Credit Suite Blog

Get current information on getting credit and loans to grow your business


The real truth behind business credit programs

Published By Janet Gershen-Siegel at December 11th, 2017

Building business credit means that your company attains opportunities you never believed you would. You can get new equipment, bid on realty, and deal with the company payroll, even when times are a bit lean. This is specifically helpful in seasonal business enterprises, where you can go for several months with simply very little sales.

Because of this, you need to tackle building your corporate credit. Enhance and maintain your scores and you will have these opportunities. Do not, and either you do not get these opportunities, or they will cost you a lot more. And no company owner wants that. You must understand what affects your business credit before you can make it better.

Credit History Length Matters

This is generally the length of time your small business has been making use of business credit. Needless to say newer firms will have short credit histories. While there is not a lot you can particularly do about that, do not panic. Credit reporting bureaus will also look at your personal credit score and your very own history of payments. If your own personal credit is excellent, and especially if you have a fairly lengthy credit history (that is, you did not just get your very first credit card recently), then your consumer credit can come to the rescue of your corporate.

Naturally the opposite is also right– if your consumer credit history is poor, then it will affect your corporate credit scores until your company and consumer credit can be split up.

Do not Let Your Credit Utilization Rate to Damage Your Company

Your credit utilization rate just means the amount of cash you have on credit which is then divided by your total available credit. Lenders generally do not wish to see this exceed 30% (so for every $100 in credit, do not borrow on in excess of $30 of that). If this percent is increasing, you’ll need to spend down and satisfy your financial debts ahead of borrowing more.

Your Payment History is Important

Late monthly payments will impact your company credit score for a good seven years. If you pay your business (and personal) financial obligations off, as rapidly as possible and as fully as possible, then you can make a very real difference when it concerns your credit scores. Be sure to pay on schedule and you will experience the rewards of promptness.

Your Personal Credit can bear upon Your Corporate Credit

Are you having an unsatisfactory business year? Then it could wind up on your personal credit score. And in case your firm has not been around for too long, it will directly influence your corporate credit. Nonetheless, you can unlink them both by taking steps to uncouple them. Say, if you get credit cards only for your company, or you open up business checking accounts and various other bank accounts (or perhaps get a business loan), then the credit reporting agencies will start to treat your private and corporate credit independently. Also, be sure to incorporate, or at least file a DBA (doing business as) status. You can also take care of your company’s charges with your business credit card or checking account, and ensure it is the small business’s full name on the bill and not yours.

The Credit Reporting Bureaus Can Just Plain Get it Wrong

Just Like as each and every entity out there, credit reporting agencies such as Equifax and Experian are only as good as their records. If your business’s name is like another’s, or your name is a lot like another entrepreneur’s, there can potentially be some oversights. So keep an eye on those reports, and your company report at Dun & Bradstreet, PAYDEX. Remain on top of these reports and contest charges with documentation and clear-cut communications. Do not just allow them to stay wrong! You can correct this! And while you’re at, it you should also be monitoring the credit reporting bureau which only handles consumer and not small business credit, TransUnion. If you do not know exactly how to pull a credit report, do not fret. It’s easy.

Once you understand what affects your corporate credit score, you are that much nearer to building improved corporate credit.

Leave a Reply

Your email address will not be published. Required fields are marked *